Chinese blacklist an early glimpse of sweeping new social-credit control

Journalist Liu Hu, who was arrested and accused of ‘fabricating and spreading rumours’ in 2013 and was required to pay a fee as part of his punishment, found out afterward of state-imposed restrictions placed on his ability to buy property, take out a loan or travel on the country’s top-tier trains.

Liu Hu spent two decades pushing hard at the bounds of censorship in China. An accomplished journalist, he used a blog to accuse high-level officials of corruption and wrongdoing and to publish details of misconduct by authorities.

In late 2013, he was arrested and accused of "fabricating and spreading rumours." Late in 2016, in a separate case, a court found him guilty of defamation and ordered him to apologize on his social-media account, which at the time had 740,000 followers. If he was unwilling to do that, the court said, he could pay verdict in an authorized news outlet. Mr. Liu paid the court $115, an amount he says he believed would cover publication costs.

Then, he said, the judge told him the entire verdict needed to be published, at a cost of at least $1,330.

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But in the midst of Mr. Liu's attempt to seek legal redress early in 2017, he discovered that his life had abruptly changed: Without any notice, he had been caught up in the early reaches of a social-credit system that China is developing as a pervasive new tool for social control – one expected to one day tighten the state's grip on its citizens. Critics have called it an Orwellian creation – a new kind of "thought police."

What it meant for Mr. Liu is that when he tried to buy a plane ticket, the booking system refused his purchase, saying he was "not qualified." Other restrictions soon became apparent: He has been barred from buying property, taking out a loan or travelling on the country's top-tier trains.

"There was no file, no police warrant, no official advance notification. They just cut me off from the things I was once entitled to," he said. "What's really scary is there's nothing you can do about it. You can report to no one. You are stuck in the middle of nowhere."

First envisioned in the mid-1990s, China's social-credit system would assign a ranking to each of the country's almost 1.4 billion people. Unlike a Western rating based on financial creditworthiness, China's social-credit backers want their system to be all-encompassing, to evaluate not just financial matters but anything that might speak to a person's trustworthiness. In modern China, "trust-keeping is insufficiently rewarded, the costs of breaking trust tend to be low," a 2014 Chinese government document describing the government's plans notes.

The social-credit system aims to change that – raising the penalties for poor conduct and the rewards for deferential behaviour.

It is the most ambitious attempt by any government in modern history to fuse technology with behavioural control, placing China at the forefront of a new kind of authoritarianism, one that can mine a person's digital existence – shopping habits, friends, criminal records, political views – and judge them according to the state's standard of reliability.

It was only months later that Mr. Liu discovered what had happened. A friend pointed him to a website run by China's Supreme People's Court called the List of Dishonest Persons Subject to Enforcement, a formalized catalogue of exclusion. In Mr. Liu's case, the reason states: "This person refuses to fulfill the duties listed in the verdict even though he is able to do so."

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The blacklist, which by this summer had swelled to 7.49 million names, is among the most visible early elements of a social-credit rating system that can assess a person's commercial, social, political and moral life, providing benefits to those considered trustworthy and restrictions on those who are not. Chinese planners want the full system in place in three years. They say it will bring about a more honest, trustworthy country.

But a Globe and Mail review of more than two dozen cases, including one of a man blacklisted for stealing a few packs of cigarettes, suggests the system is exacting an outsized toll even now, in its earliest days. Mr. Liu's case, too, shows how the social-credit system is being used to silence dissent.

"I can't say that Liu Hu's outspokenness led directly to his troubles. But we have to admit that Liu's is not a rare case. Many people who are, like him, similarly controversial are very likely to endure the same ordeal," said Zhu Xiaoding, a Beijing lawyer who specializes in administrating proceedings.

"And the lack of an appeal mechanism has made these people unable to seek the help they really need. That leaves them in despair, because their social relations, as well as their material lives, have been ruined."

Some cities have even changed the ringback tone – the sound a caller hears – of those being punished to warn the caller that "the person you are calling is on the central credit blacklist."

To some, that's cause for optimism in the future of China.

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"We are in dire need of rebuilding. We must rebuild social morality, business integrity, food safety, officials' power," said Lin Junyue, an academic sometimes called the founder of China's social-credit theory, which he has studied since the mid-1990s.

Such a system, he said, can serve as a "fantastic" counterterrorism tool, promoting social stability and peaceful co-existence.

"People who like it see me as a great contributor to a better society. People who disdain it accuse me of providing a digital tool for government to wield its power against people. I've heard voices of both sides."

It doesn't much matter. The social-credit system now under construction promises to reshape the country in profound ways.

The 2014 document offers a partial list of the areas that will be governed by social-credit scores: import and export trading, health inspection, government procurement, labour and employment, taxation, public transportation, social security, scientific research management, Communist Party promotion and appointments, applications for government financial support, hotels and restaurants, currency conversion, insurance sales, work in mining, chemicals, the manufacture of special equipment and the production of food and medicine.

China's e-commerce heavyweights have already begun creating their own credit markers, which have spread quickly. Take Sesame Credit, the creation of an affiliate of Alibaba. It parses a person's buying habits and contacts to come up with a credit score, which can be hurt by, for example, video games – an indicator of "an idle person," the company has said – and helped by the purchase of diapers, an indication of reliability.

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On 58.com, a Craigslist-style marketplace, Sesame scores have become increasingly important. Lease agent Huang Nu'an, for example, offers a 50-per-cent waiver on rental deposits for those with high scores.

"You can't be sure that such a person is 100-per-cent trustworthy. But in the world of business, this kind of index is better than nothing," he said. "There is huge room for us to make this concept more widespread."

The development of social credit is also an attempt to regain the breadth of control the Communist Party once wielded over the country through work units and the state economy, before the rise of private enterprise eroded that power.

Social credit offers a powerful corrective while giving extraordinary new power to those who design and maintain the system's algorithm.

"Put in the hands of the Chinese government the ability to determine your level of honesty and you have a perfect storm of human-rights abuses," said Maya Wang, China researcher for Human Rights Watch.

Take the blacklist, which has been devised to deliver shame as well as punishment to offenders. Its website hosts a scrolling list of recent additions, and any name can be searched, typically yielding a brief description of the wrongdoing.

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The consequences can be severe. When Xie Wen, the founder of a corporate entertainment firm, was placed on the list after a dispute with another company, banks cut him off, rendering him unable to pay employees and hampering his ability to seek legal redress. Being "discredited" tainted his name and business partners abandoned him.

"I felt like I was being tortured, mentally and physically," he said. "It's a psychological burden that will stick to you for quite a few years."

Mr. Xie paid a sum of money ordered by the court and was removed from the blacklist.

In the eyes of social-credit supporters, that makes him a success story.

The principle is "to create a disciplinary mechanism in which all of us will unite to pressure people who behave badly or commit crimes to come back to the right track," said Li Ming, a credit-counselling expert at the Beijing Institute of Big Data Research.

"What government really wants to stress is setting up a society of credibility and integrity."

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It's fair to think of social credit as an updated version of the renshi dangan, the decades-old Communist Party system of maintaining detailed personal files on cadres, said Chen Tan, a scholar at Guangzhou University and an expert on the system.

Prone to abuse, the information in those secret files could easily end a person's career.

But the social-credit system will not suffer such issues, since it will "also set standards for government," Prof. Chen said.

And, he said, the positives outweigh the negatives. Social credit "will set an important tone for society and push everyone to pay attention to their own behaviour." He expects it to be so effective that the government will save money on education because it "won't need to spend a lot on moral campaigns and verbal encouragement."

But the blacklist has already shown how governments and courts can use the system to upturn lives for questionable reasons.

The Globe examined records of two dozen people on the blacklist, many of whom had committed minor offences. One man was blacklisted over a $1,500 rent payment. Another had not repaid $1,900. Another failed to pay a $195 fine. Yet another had shoplifted 10 packs of cigarettes worth $70.

Mr. Lin, the intellectual father of the social-credit system, agreed that in the case of the shoplifter, the punishment "is a bit over the top."

But for China, the value of creating the system far outweighs a few legal excesses, he said.

"Compared to the improvement in the atmosphere of the entire society, their sacrifice is worth it."

It's a question, he added, of how much value to give human rights. A government that worries too much about individual freedoms can impede economic development, he said. China has chosen a different course: pursuing the well-being of the country as a priority above all others.

"If we have to risk turning China into a country like Iraq, Libya, the Philippines or Taiwan to obtain democracy, I'd rather we remain where we are right now," he said. "Those are democracies that sacrifice people's lives and social stability. We don't need it."

With reporting by Alexandra Li

Editor’s note: An earlier version of this article included an incorrect account of one case where a father was executed for murder, and punishment for his debt passed on to his daughter. In fact, The Globe and Mail no longer has confidence in that story.

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